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CHART: How Deficit Cuts Are About To Hurt The Economy

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Under current law, real GDP is projected to grow by 2.0 percent this year and just 1.1 percent next year, CBO said. The unemployment rate (per fourth quarter percentage) is expected to rise to 8.9 percent in 2012 and 9.2 percent in 2013 -- the figure is expected to stay above 7 percent until 2015.

The findings reflect the irony of Washington's laser-like focus on the deficit in recent years, which has led to various budget-tightening measures that have held back rather than helped the economy. And if the remainder of the contractionary fiscal policies go into effect, that trend appears set to continue.

CBO explained the consequences of spending cuts, a focal point of legislation last year.

"Spending resulting from the American Recovery and Reinvestment Act and outlays for unemployment compensation and other benefits that tend to increase during economic downturns will continue to ebb over the next few years," CBO said. "Caps on discretionary spending and other procedures established in the recently enacted Budget Control Act also will hold down growth in federal spending."

In the nearer term CBO projected, as have many economists, that failing to extend the payroll tax cut and unemployment insurance would be an immediate hit to the economy. They expire in one month.

Image from Sergey Mironov/ Shutterstock

About The Author

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Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at sahil@talkingpointsmemo.com and follow him on Twitter at @sahilkapur.